Costa Rica's President Seeks Reform Amid Economic Slowdown

President Miguel Angel Rodriguez believes that Costa Rica's reluctance to embrace reform has led to stagnation, threatening foreign investment and economic growth. The country's president is proposing an overhaul of flagging institutions and the dismantling of state monopolies, which he believes will stimulate economic growth and attract private investment. However, the opposition is resisting the changes, and the next two months will be crucial in determining the success of the reforms.

Key Takeaways:

• Costa Rica's economic slowdown has been attributed to the country's reluctance to implement reforms, with growth rates lower than the Latin American average and income levels falling behind.
• President Miguel Angel Rodriguez believes that the dismantling of state monopolies and the introduction of competition in key sectors such as telecommunications and energy will boost economic growth and attract foreign investment.
• The government predicts that its package of reforms will bring growth rates of 6% by 2001 and cut inflation to 7%, while without the reforms growth will sink to 4% and inflation will remain at 12 or 13%.
• The National Liberation party (PLN), the main opposition, is resisting the reform plans, particularly the privatization of the state insurance company and the sale of telecoms assets.
• Consensus is still lacking in two key areas of reform, but President Rodriguez believes that the process of building support outside of the national assembly will help to overcome opposition.
• The government is also looking to increase investment by upgrading roads and ports, and reducing tariffs and government spending to cut the fiscal deficit.

Statistics:

• Costa Rica's growth rate has been lower than the Latin American average.
• Income levels in Costa Rica have fallen behind other countries in the region.
• The country's education levels have only just regained their 1980 levels of students in secondary education.
• Panama now has better average education than Costa Rica.
• The government's package is predicted to bring growth rates of 6% by 2001 and cut inflation to 7%.
• Without the reforms, growth is expected to sink to 4% and inflation will remain at 12 or 13%.
• The fiscal deficit is targeted at 3% of gross domestic product this year.

Sources:

• Financial Times Limited, 1999.
• Government paper, setting out economic targets and policies to achieve them.
• Interview with Felix Delgado, of Costa Rica's CEFSA consulting group.
• Interview with Rodolfo Cerdas, an academic and political analyst.
• Interview with Alicia Fournier, deputy leader in the assembly of the National Liberation party (PLN).